Loss Percentage Formula with Examples
What Is Loss Percentage?
Loss percentage measures how much financial loss was incurred on a transaction, expressed as a percentage of the original cost price. It tells you not just how much money was lost, but how significant that loss was relative to the amount originally spent.
For example, if you buy a product for $200 and sell it for $160, your loss is $40. But expressing that as a percentage — 20% — immediately shows how severe the loss was compared to the investment. This makes loss percentage a critical metric in business, trade, retail, and personal finance.
Loss occurs when the selling price of a product is less than its cost price. This can happen due to many reasons — market competition, perishable goods, urgent liquidation, economic downturns, or simply poor pricing decisions. Understanding how to calculate loss percentage helps businesses identify weak areas, adjust pricing strategies, and minimize financial damage.
Key Terms You Must Know
Before applying the formula, make sure you understand these essential terms:
Cost Price (CP) — The original price at which a product is purchased or manufactured. This is the base for all profit and loss calculations.
Selling Price (SP) — The price at which the product is sold to the customer.
Loss — When the selling price is less than the cost price. Loss = CP − SP
Loss Percentage — The loss expressed as a percentage of the cost price.
The Loss Percentage Formula
The standard formula for loss percentage is:
Loss Percentage = (Loss / Cost Price) × 100
Or written in full:
Loss % = [(CP − SP) / CP] × 100
Where:
- CP = Cost Price
- SP = Selling Price
You can rearrange this formula to find other unknowns:
- To find Loss: Loss = CP − SP
- To find Selling Price: SP = CP × (1 − Loss% / 100)
- To find Cost Price: CP = SP / (1 − Loss% / 100)
- To find Loss on Selling Price: Loss% on SP = (Loss / SP) × 100
Step-by-Step Examples
Example 1 — Basic Loss Percentage
Problem: A shopkeeper buys a shirt for $150 and sells it for $120. What is the loss percentage?
CP = 150, SP = 120
Loss = CP − SP = 150 − 120 = 30
Loss % = (Loss / CP) × 100
Loss % = (30 / 150) × 100
= 0.20 × 100
Answer: 20% loss
Example 2 — Finding the Selling Price
Problem: A trader buys goods for $600 and is forced to sell at a loss of 12%. What is the selling price?
CP = 600, Loss % = 12
SP = CP × (1 − Loss% / 100)
SP = 600 × (1 − 12/100)
SP = 600 × 0.88
Answer: SP = $528
Example 3 — Finding the Cost Price
Problem: A person sells a bicycle for $340 at a loss of 15%. What was the cost price?
SP = 340, Loss % = 15
CP = SP / (1 − Loss% / 100)
CP = 340 / (1 − 15/100)
CP = 340 / 0.85
Answer: CP = $400
Example 4 — Loss Percentage on Selling Price
Problem: A product is bought for $180 and sold for $150. What is the loss percentage calculated on the selling price?
CP = 180, SP = 150
Loss = CP − SP = 180 − 150 = 30
Loss % on SP = (Loss / SP) × 100
Loss % on SP = (30 / 150) × 100
Answer: 20% loss on selling price
Note: Loss % on CP = (30 / 180) × 100 = 16.67%. The two values differ because the base is different.
Example 5 — Loss After Additional Costs
Problem: A merchant buys a television for $800 and spends $50 on transport. He sells it for $765. What is his loss percentage?
Total CP = 800 + 50 = 850
SP = 765
Loss = CP − SP = 850 − 765 = 85
Loss % = (85 / 850) × 100
Answer: 10% loss
Example 6 — Comparing Two Products by Loss Percentage
Problem: Product A costs $80 and sells for $68. Product B costs $500 and sells for $440. Which product has a higher loss percentage?
Product A:
Loss = 80 − 68 = 12
Loss % = (12 / 80) × 100 = 15%
Product B:
Loss = 500 − 440 = 60
Loss % = (60 / 500) × 100 = 12%
Answer: Product A has a higher loss percentage (15%) even though Product B has a greater absolute loss ($60 vs $12).
This example shows why loss percentage is more meaningful than the raw loss figure when comparing multiple products or transactions.
Loss vs Profit — Side by Side
| Situation | Condition | Formula | Example |
|---|---|---|---|
| Profit | SP > CP | (Profit / CP) × 100 | CP=$100, SP=$130 → 30% profit |
| Loss | CP > SP | (Loss / CP) × 100 | CP=$100, SP=$80 → 20% loss |
| No Profit No Loss | SP = CP | 0% | CP=$100, SP=$100 → 0% |
Common Mistakes to Avoid
Mistake 1 — Dividing by the selling price instead of cost price.
Always divide by the cost price, not the selling price, unless specifically asked for loss on selling price.
Wrong: (Loss / SP) × 100
Correct: (Loss / CP) × 100
Mistake 2 — Forgetting to include additional costs in the cost price.
Transport, packaging, labour, and overhead costs must all be added to the purchase price to get the true cost price before calculating loss percentage.
Mistake 3 — Treating loss percentage and loss amount as the same.
A loss of $100 on a $200 item is a 50% loss. A loss of $100 on a $1,000 item is only a 10% loss. Always express loss as a percentage of the cost price for a meaningful comparison.
Quick Reference — Loss Percentage Formulas
| What to Find | Formula |
|---|---|
| Loss | CP − SP |
| Loss Percentage | (Loss / CP) × 100 |
| Selling Price (with loss) | CP × (1 − Loss% / 100) |
| Cost Price (from loss) | SP / (1 − Loss% / 100) |
| Loss on Selling Price | (Loss / SP) × 100 |
| Selling Price (from loss%) | CP − (Loss% / 100) × CP |
Related Formulas
Loss percentage connects directly to several other important formulas:
- Profit Percentage Formula — The opposite of loss percentage. Used when selling price is greater than cost price. [See Profit Percentage Formula →]
- Percentage Formula — Loss percentage is a direct application of the basic percentage formula on cost and selling price. [See Percentage Formula →]
- Percentage Decrease Formula — A loss is essentially a percentage decrease from the cost price to the selling price. [See Percentage Decrease Formula →]
- Discount Formula — Discounts applied on selling price can sometimes push the transaction into a loss. [See Discount Formula →]
- Simple Interest Formula — Financial losses on investments and deposits relate closely to interest rate calculations. [See Simple Interest Formula →]
- Average Formula — Average loss percentage across multiple products helps businesses identify problem areas. [See Average Formula →]
Related Calculator and Pages
Frequently Asked Questions (FAQ)
Q1. What is the loss percentage formula?
The loss percentage formula is: Loss % = (Loss / Cost Price) × 100. Where Loss = Cost Price − Selling Price. It expresses the loss incurred as a percentage of the original cost price.
Q2. How do you calculate loss percentage when cost price and selling price are given?
Subtract the selling price from the cost price to find the loss. Then divide the loss by the cost price and multiply by 100. For example, if CP = $250 and SP = $200: Loss = 50, Loss % = (50 / 250) × 100 = 20%.
Q3. How do you find the selling price when cost price and loss percentage are given?
Use the formula: SP = CP × (1 − Loss% / 100). For example, if CP = $400 and loss% = 25%, then SP = 400 × 0.75 = $300.
Q4. How do you find the cost price when selling price and loss percentage are given?
Use the formula: CP = SP / (1 − Loss% / 100). For example, if SP = $510 and loss% = 15%, then CP = 510 / 0.85 = $600.
Q5. What is the maximum possible loss percentage?
The maximum loss percentage is 100%, which means the item was given away for free (SP = 0). In practice, a loss percentage above 50% is considered very severe and unsustainable for most businesses.
Q6. What is the difference between loss percentage and loss amount?
Loss amount is the actual money lost in a transaction (CP − SP). Loss percentage expresses that loss relative to the cost price as a percentage. Loss percentage is more useful for comparison because it shows the proportion of money lost, not just the absolute figure.
Summary
The loss percentage formula — Loss % = (Loss / Cost Price) × 100 — is a fundamental calculation in business, commerce, and personal finance. It converts a raw financial loss into a meaningful percentage that shows how significant the loss was relative to the original investment.
Always calculate loss as CP minus SP, and always divide by the cost price when finding loss percentage. Use the rearranged versions of the formula to find the selling price from a known loss percentage or to reverse-calculate the cost price from a known selling price.
Together with the profit percentage formula, discount formula, and percentage decrease formula, the loss percentage formula gives you a complete toolkit for analyzing any financial transaction and making smarter pricing and business decisions.